Tax Planning 11- Interest deductibility limits for passive business activities Flashcards
What is the holding period of common stock to determine if a dividend is qualified and therefore receives preferential tax treatment?
Stock must be held more than 60 days during the 121-day period begins 60 days before the ex-dividend date.
What is the ex-dividend date?
The first day following the declaration of the dividend on which the buyer of the stock is not entitled to receive the next dividend payment
Each dividend payment needs to be qualified on its _______.
Each dividend payment needs to be qualified on its own.
Dividends paid by _____ ______ _______ are eligible for the__________ rates.
Dividends paid by closely held businesses are eligible for
the preferential rates.
Dividends paid on____ _______ ________that are
readily tradable on U.S. securities markets are eligible for
the preferential rates
Dividends paid on foreign corporation stocks that are
readily tradable on U.S. securities markets are eligible for
the preferential rates
What are the three preferential tax rates for qualified dividends?
0, 15, 20
When does 3.8% surtax kick in for qualified dividends?
When AGI hits certain thresholds
What is the holding period of preferred stock to determine if a dividend is qualified and therefore receives preferential tax treatment?
90 days during the 181 period that begins 90 days before the ex-dividend date.
What are three criteria a foreign corporation must meet for the purpose of qualified dividend rules?
- Incorporated in the US
- Eligible for income tax treaty with the US
- Stock is tradeable in an established US securities market
What is not a qualified dividend?
Distributions from tax-exempt cooperation or farmers or farmer’s cooperatives
Nonqualified foreign corporations
Dividends paid on deposits with mutual savings banks, credit unions, and similar financial institutions
Capital gain distributions
Dividends from a corporation on employer stock ownership
